Activision Sees Stagnation

Activision (ATVI) poured some coal in investors' stockings Wednesday afternoon, warning that earnings and revenue for the next two quarters will be "significantly lower" than previously forecast guidance.

The video game-software maker blamed the disappointing outlook for the holiday and first calendar quarters on worse-than-expected sales and reorders of the company's titles, price cuts and weak sales overall in U.S. and European markets.

In a statement, Michael Griffith, CEO of Activision's publishing division, acknowledged that the holiday period wasn't yet over and that there was still uncertainty about how the season would turn out.

However, the company had seen enough to feel like it needed to update its outlook, he said.

"We are disappointed that our earnings performance will come in substantially below our previous outlook," Griffith said.

For their part, investors seemed disenchanted. In recent after-hours trading, shares of Activision were off $2.04, or 14%, to $12.26. The company's stock closed regular trading on Wednesday -- prior to the announcement -- up 72 cents, or 5.3%, to $14.30.

The company did not provide new estimates for the coming periods. In November, Activision officials predicted that the company would earn 52 cents per share on $790 million in sales in the current, third fiscal quarter and 5 cents a share on $226 million in sales in the coming fourth quarter.

Analysts had forecast profits of 53 cents a share on $799.3 million in sales in the current period and 6 cents a share on sales of $230.1 million next quarter.

Activision's warning is somewhat unexpected. According to market data from NPD released Tuesday, the company saw strong sales in November.

The company's Call of Duty 2 title was the most popular game sold for Microsoft's (MSFT) new Xbox 360, and retail sales of Activision's games in the U.S. grew 54% year over year to $97 million.